US-based Nvidia, one of the world's leading companies in the field of artificial intelligence chips, was shaken by espionage allegations made against its CEO Jensen Huang.
The company's board of directors launched an independent investigation after Huang admitted to having an extramarital affair with a businessman whom US intelligence suspected of collecting information on behalf of China.
Following the developments, Nvidia shares fell approximately 5 percent at the opening of Wall Street on Monday. While losses approached 9 percent during the day, the decline in shares was recorded as 5.5 percent as of 19.10 Turkish lira.
IT WAS ALLEGED THAT HE SPYED ON BEHALF OF CHINA
According to the news published by the New York Times at the end of October, US intelligence officials determined that Alice Huang, a Chinese executive affiliated with the Singapore-based data center company Megaspeed, was passing information to the Beijing administration.
It was stated that the woman, also known as Huang Le and who is not related to the Nvidia CEO, developed a close relationship with Jensen Huang.
It was reported that US authorities had previously followed Alice Huang due to suspicions about the delivery of advanced Nvidia chips, whose exports were restricted, to China.
The news suggested that the relationship in question may have provided Alice Huang with the opportunity to obtain information about US President Donald Trump's evaluations of artificial intelligence policies.
HE ADMITTED THAT HE CHEATED ON HIS WIFE
In his message to company employees, 63-year-old Jensen Huang admitted that he had an extramarital affair and apologized to his family.
Huang used the following statements in his message:
"I was not faithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I am deeply sorry."
Huang's statement came after allegations that the relationship in question was linked to Chinese intelligence were publicly discussed.
INDEPENDENT INVESTIGATION FROM NVIDIA
Nvidia's board of directors announced in a statement published on Sunday that an independent investigation was launched following news that the company's founder and CEO Jensen Huang was the target of a foreign intelligence operation.
The company statement emphasized that there is no reason to believe that the national security of the United States or Nvidia's trade secrets have been compromised.
However, it was noted that all available information regarding the allegations will be examined.
The board also expressed confidence in Huang and his management team.
TRUMP: AN HONORABLE PERSON
US President Donald Trump also made a statement about the allegations against Nvidia CEO.
Describing Huang as an honorable person, Trump said that the Nvidia CEO is carrying out successful work.
Trump responded to the question of whether Huang would attend his visit to China by stating that he could take him with him.
According to the New York Times, Trump was informed about the intelligence findings regarding Huang's relationship with the Chinese businessman about a year ago, but did not take any action.
Trump also stated that he did not regret not taking action on this issue.
CHINA REJECTED THE CLAIMS
The Beijing administration rejected the allegations that Alice Huang was operating on behalf of Chinese intelligence.
Chinese Foreign Ministry Spokesperson Guo Jiakun argued at a press conference on Monday that the so-called Chinese spy narrative was a completely baseless smear attempt.
The developments took place at a time when competition between Washington and Beijing in the field of artificial intelligence and advanced technology was increasingly intensifying.
The US administration imposes restrictions on the export of high-tech chips in order to limit China's access to advanced artificial intelligence technologies.
US CONGRESS SUMMONED HUANG
Republican committee chairmen in the US House of Representatives requested that Jensen Huang attend a closed-door briefing in Congress on November 18.
In the letter sent by Foreign Affairs Committee Chairman Brian Mast, China Special Committee Chairman John Moolenaar and Intelligence Committee Chairman Rick Crawford, Huang was asked to provide information about his relationship with Alice Huang and the security protocols Nvidia implemented against foreign intelligence activities.
Lawmakers said there are serious national security concerns about China's access to sensitive U.S. technologies and information.
IS THE POSITION OF CEO IN DANGER?
Technology analyst Dan Ives of Yorkville Ives investment firm evaluated the investigation as a serious loss of reputation for Jensen Huang.
Ives said he expects Huang to retain his position in the short term, but there is a possibility that he may step down as CEO depending on the results of the investigation.
Stating that Huang is an executive who cannot be easily replaced for Nvidia, Ives stated that the developments may increase regulatory pressure on the company.
Briefing.com analyst Patrick O'Hare said that investors are currently considering the developments as a problem specific to Nvidia.
O'Hare noted that the decline in company shares was due to the uncertainty created by Huang's personal behavior, and that there was no expectation of a wider crisis in the markets yet.
The investigation into Nvidia coincides with a period when artificial intelligence companies are facing selling pressure on Wall Street. It is stated that approximately 2 trillion dollars of market value has been erased in the technology-oriented Nasdaq market in the last month.
